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Indirect Land Use Change (ILUC)

Commission Européenne - MEMO/12/787   17/10/2012

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European Commission

MEMO

Brussels, 17 October 2012

Indirect Land Use Change (ILUC)

What are biofuels?

Biofuels are liquid or gaseous transport fuels made from biomass. The most important biofuels today are bioethanol (made from sugar and cereal crops) used to replace petrol, and biodiesel (made mainly from vegetable oils) used to replace diesel.

There are two distinctive categories of biofuels:

Conventional (first generation) biofuels:

First generation or conventionally produced biofuels are biofuels produced from food crops, such as sugar, starch and vegetable oils. They are produced from land using feedstock which can also be used for food and feed.

Advanced (second and third generation) biofuels:

Second and third generation or advanced biofuels are produced from feedstock that do not compete directly with food and feed crops, such as wastes and agricultural residues (i.e. wheat straw, municipal waste), non-food crops (i.e. miscanthus and short rotation coppice) and algae.

Total biofuel consumption in the EU represented about 4,7% of transport fuel consumption in 2010, mainly first generation biofuels. Biofuel consumption differs significantly across Member States.

What are bioliquids?

Bioliquids are liquid fuels made from biomass used for energy purposes other than transport. Bioliquids are normally made from vegetable oils. They are only used in some Member States and their consumption levels in the EU are low.

Why do we need biofuels?

We need sustainable biofuels to reach our 2020 targets for the use of renewable energy, fight climate change and to replace fossil fuels in the transport sector. Sustainable biofuels are the main alternative to petrol and diesel used in transport as they are low carbon fuels easily deployable on existing transport infrastructure. This is important as the transport sector produces around 20% of the greenhouse gas emissions in the European Union and emissions are expected to grow in the medium term due to increasing demand.

What is indirect land use change (ILUC)?

When biofuels are produced on existing agricultural land, the demand for food and feed crops remains, and may lead to someone producing more food and feed somewhere else. This can imply land use change (by changing e.g. forest into agricultural land), which implies that a substantial amount of CO2 emissions are released into the atmosphere. What is new in the legislative proposal?

The new rules will make biofuels used in the EU more sustainable and will help us to reduce further Greenhouse Gas emissions and encourage greater market penetration of advanced biofuels.

This will be achieved in particular by:

  • increasing the minimum greenhouse gas saving requirements for new installations to 60%, compared to fossil fuels, in order to improve the efficiency of biofuel production processes as well as discouraging further investments in installations with low greenhouse gas performance;

  • including indirect land use change (ILUC) factors in the reporting by fuel suppliers and Member States of greenhouse gas savings of biofuels and bioliquids;

  • limiting the amount of food crop-based biofuels and bioliquids that can be counted towards the EU's 10% target for renewable energy in the transport sector by 2020, to the current consumption level – 5% up to 2020, while keeping the overall renewable energy and carbon intensity reduction targets; this means that the remainder will have to come mainly from second generation biofuels;

  • providing incentives for biofuels with no or low indirect land use change emissions, and in particular the 2nd and 3rd generation biofuels produced from feedstock that do not create an additional demand for land, including algae, straw, and various types of waste, as they will contribute more towards the 10% renewable energy in transport target of the Renewable Energy Directive.

What are ILUC factors?

The proposal sets out indirect land-use change (ILUC) factors for different crop groups. These factors represent the estimated land use change emissions that are taking place globally as a result of the crops being used for biofuels in the EU, rather than for food and feed.

Simply put, all biofuels that use land will get an ILUC factor. Feedstock that do not require agricultural land for their production (i.e. waste, residues, algae) and those that cause direct land use change (i.e. in which case operators need to calculate their actual emissions) are exempt from the factors.

Under the new rules, the estimated emissions from indirect land use change (ILUC factors), are to be included in Member States' and fuel suppliers' reporting of greenhouse gas savings under the Renewable Energy Directive and in the Fuel Quality Directive respectively.

Why are these changes necessary?

The scientific evidence on indirect land use change impacts of biofuels is indicating that some types of biofuels, such as those from waste and residues, are much better than others in terms of their climate impact. These biofuels, which are typically more expensive to produce, also do not pose problems related to increased food prices as they do not come from food crops. But unless action is taken now, they are not likely to be available in any significant amounts in 2020.

Therefore, the Commission is proposing legislation that will enhance the incentives for the best performing biofuels, and thereby improve the greenhouse gas savings of the overall biofuel mix used in the EU by 2020 compared to fossil fuels, and reduce their impact on the potential increase in food prices.

Does that mean that EU has radically changed its policy in this field?

No. This is not a radical change of policy.

The Directives on renewable energy and fuel quality asked the Commission to investigate the impact of ILUC, and propose ways to minimise it if necessary. The best available science indicates that ILUC is an issue that needs to be tackled and the current proposal does exactly that. The proposed changes are needed to ensure that the conditions Member States agreed on when adopting the legislation and notably the 10% renewable energy in transport target, i.e. that biofuels are sustainable and a significant amount of advanced biofuels are available up to 2020, are met.

What will happen to first generation biofuels? Will they be phased out?

The Commission is of the view that all biofuels made from food crops and which do not lead to substantial greenhouse gas savings (when emissions from indirect land-use change are included) should not be subsidised in the period after 2020. In the interim period, the proposal aims at stabilising the consumption of first generation biofuels.

Will there be any changes for Member States?

For the fulfilment of the 10% renewable energy target, the Member States can only count 5% biofuels from food crops. The rest needs to come notably from advanced biofuels, like the ones made from wastes or agricultural residues such as straw, but also from the use of renewable electricity in road and rail transport.

Will there be any changes to the introduction of E10 in Member States?

E10 means blending petrol with up to 10% (in volume) of ethanol and is a means to achieve the 2020 targets, which remain unchanged. Ethanol can not only be produced from food crops, but also from residues. Furthermore, the best available scientific evidence on ILUC indicates that ethanol offers significant greenhouse gas savings, also when ILUC emissions are included and that the use of E10 does not contribute to dramatic increases of food prices. E10 should therefore be introduced equally across the EU without delay.

Will the 5% limitation in the amount of first generation biofuels that can be counted towards the targets of the EU legislation put a limit on the production of first generation biofuels?

No. The production and consumption of first generation biofuels can be higher than 5% in a given Member State, but the excess of 5% will not count towards the Member States' renewable energy targets.

Can growing use of biofuels have a negative impact on the availability and prices of food and feed in the world?

All increased use of land increases the competition for the resources that we get from our land areas. This holds for crops used for biofuels, cotton used for clothes, coffee, maize used for feeding animals for meat production and palm oil used for cosmetics.

Under the new rules, the growth in biofuels in the EU should come from feedstock that are not in competition with food crops, thus minimising these impacts.

How much arable land is used for growing the feedstock for biofuels? In the EU? In the world?

The globe has ca 13 200 Mha of land of which about 1600 Mha is used for growing various crops. Less than 3% of global cropland is used to produce biofuels. In the EU, we use around 2% of our agricultural land for biofuels.

Where are the biofuels consumed in the EU being produced?

In 2010, 83% of the biofuels consumed in the EU were produced in the EU, part of which is produced from imported feedstock. The main countries exporting biodiesel to the EU were Argentina, Brazil and USA for soy biodiesel and Indonesia and Malaysia for palm oil. For bioethanol, the main exporting countries were Brazil for sugarcane bioethanol and the USA for maize bioethanol.

Do the new criteria apply also to imported biofuels?

Yes, all the rules for greenhouse gas reporting and sustainability criteria for biofuels apply equally to biofuels produced in the EU Member States and third countries. There is therefore no discrimination.

When will the new rules take effect?

The new rules will take effect after the European Parliament and the Council will have adopted the proposal in a co-decision procedure. Member States then have to transpose the provisions into national law within one year.


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